We report on a close correlation between the growth conditions of InN/Al2O3 (0 0 0 1) epilayers grown by plasma-assisted molecular beam epitaxy (MBE), their optical properties in the IR range, and the In clustering in the layers. High-spatial resolution techniques, namely micro-cathodoluminesesence, back-scattered electron imaging and energy dispersive X-ray analysis, were used to establish this correlation. The In-rich growth conditions, achieved by increasing either the growth temperature or the effective In/N flux ratio, causes the In clustering in InN, responsible in our samples for the 0.7-0.8 eV luminescence and IR optical absorption. Growth under In/N = 1: 1 conditions slightly shifted to the N-rich side generally produces InN layers without visible In clusters, having an optical absorption edge around 1.4 eV. A possible mechanism of In cluster formation is suggested on the basis of thermodynamic considerations for InN MBE growth. (C) 2004 Elsevier B.V. All rights reserved.